By Brandon Matthews
For many years, people have wondered how money managers were able to invest in Sirius XM, despite having a stock price below $5.00 a share, which is a requirement under many growth and value fund management rules. One such way is through index funds. Sirius XM has been listed with the Russell 3000 and Russell Global Indexes, which has served to help drive demand on the Institutional side of the business.
Each year on May 31, Russell Investments rebuilds its Russell 3000 and global indexes. The practice serves to rank U.S. equities from the largest market capitalization to the lowest. Index funds and ETF’s are dependent upon these indexes.
- Top 3,000 stocks become the Russell 3000® Index.
- Largest 1,000 stocks become the Russell 1000® Index.
- Next 2,000 stocks become the Russell 2000® Index.
- The smallest 1,000 in the Russell 2000 Index plus the next smallest 1,000 comprise the Russell Microcap Index.
Despite Sirius XM (SIRI) having a sufficient market cap to remain listed, its sub one dollar share price excludes the equity from eligibility this year, under Russell’s reconstruction rules. The reconstituted list will not be finalized until June 26, and will not be publicized until June 29, 2009, with the next round of updates scheduled for June 19.
I have maintained the unpopular position that Sirius XM has at its disposal, and should implement as quickly as possible, its shareholder approved reverse stock split. The benefits of such a move are many. From a reduction in the overall float to maintaining listing requirements, it’s time for Sirius XM’s board to act.
Position: Long SIRI
Brandon,
Have to disagree with you. A reverse split now at .35 cents would be a disaster. I don’t care if they do a reverse split…but it needs to be done on strength…..not on weakeness…..imho
@asm610
At the end of this month, there will be a mass institutional sell off as a result of being removed from the index. That is the option…that or a reverse split…take your pick
I too have been for a reverse split. I see that since SIRI is going to be removed from the Russell Indexes, I don’t know if we have any other choice than a reverse split. What is the alternitive? A mass sell off and back down to .05-.12?
You don’t think that after the rs, a lot more short selling will occur? The company has weak fundamentals at this point in time. A massive short attack would once again drive this to sub dollar. Wake up! RS is not the answer. Maybe the Russell indexes will do the same as NASDAQ for the time being because of the current situation in stocks. We rs split and that will be the death of current longs and what little equity they have remaining after another short attack.
How much has SIRI benefitted from being in the Russell indexes? It didn’t stop the stock from crashing down to 5 cents. I know, so the market was tanking then too, but SIRI would be green during many red market days. Has SIRI ever traded with the market and its indexes anyway?
Brandon: This is another excellant article. I voted for the reverse split and think its absolutely necessary for so many different reasons. Is this the cause of the increase in short interest as was recently reported? Are the shorts betting that the Board will not R/S and they can short the stock back down to a nickel. this may be a golden opportunity for retail investors to buy at really low prices and finally average down and to build up good multiples. I don’t think Mel is concerned about the share price. He appears to be only focused on EBITA and cutting costs. I think he thinks that the stock price will increase over time as the economy improves, and that eventually the IPOD application will generate additional subscribers. He doesn’t seem to be concerned about the remaing equity positions held by everyone else other than Liberty Media. Your thoughts?
I dont know if anyone was at the shareholders meeting but anthony from o and a said he was there and they told him that 1 for 10 is what they were doing. Not a big fan but thats what he said
I thought Mel said no plans for rs split, just extended the right if needed in future.
thats what i heard paul, no plans and it was only going to be used for nasdaq requirements.this article sounded like it had a little panic in it.
Are you crazy. A reverse stock split will just allow the shorts to drive the stock price down again!!!! Until there is an uptick rule and the company shows some progress – NOW IS NOT THE TIME FOR A RS!!!!
@bob
Bob, I sure am glad somebody else confirms the same thing I read.
Until the company restructures its balance sheet and particularly refinances the Convertible Bond debt supported by the 263M Lent shares for the purpose of shorting this equity, it is my opinion a R/S of any kind would be disastrous. To react to the the Russel 3000 delisting in this way is absurd without fixing what is fundamentally broken first; the Company’s Balance sheet.
@bob Bob: The only panic is coming from Brandon.
brandon always panics, but he does make an interesting point here.
Brandon…NOT GONNA HAPPEN. Not for the friggin Russell index anyway. No Way dude.
F the RS! I want to seem some action from the company for f’s sake besides more signs of BS… they can do a lot more than dick the shareholders further.. like maybe run the company in a way that makes it worth something first.
Think about it. They EXTENDED the R/S until July of 2010 just last month. Mel expressed in the CC that a R/S was NOT in the cards.
Brandon, you DO realize the bashers on the Yahoo Boards and other forums are picking up your article and running with it????
You’re single handedly giving the shorts the last minute scare tactic they need to try and scare people out of their shares before the iphone app release.
I know you’re just reporting a possible “fact”….but as you said in your article that you’ve maintained an unpopular opinion that Sirius SHOULD do a R/S.
It’s just that…an OPINION. And yeah, I KNOW this is your site…so far be it for me to bash you for stating your opinion….LOL….but come on man. Couldn’t you have written about it AFTER the iphone app is released???
Your timing is just the worst man. Go check out the Yahoo Board. ALL the bashers are linking to your article to scare the hell out of shareholders.
Anyway…I think you’re wrong. But thats just MY opinion.
Peace.
Brandon,
You are way off base on your article. I sent you an e-mail to voice my opinions. I was at the meeting. Mel k clearly said there was no R/S in the plans, it was only there as a tool if needed for listing requirements if things would change drasticaly months down the road in he market and the regulations. Mel K spoke for 10 minutes about this.
not quite sure why you would write that article on the eve of Stock Shock – the Movie getting natinal recognition in 3 hrs and 35 minutes from now. Yes, an AP news release about the movie is coming out at 3:05 am on June 16th, 2009 and you are writing about a R/S that is never going to happen, not until the movie Stock Shock tells the world about the Wall Street Corruption and the 2007 up-tick rule having been eliminated in July of 2007. Now, when they re-instate the up-tick rule, and Short Selling is exposed to the world via the movie STOCK SHOCK and they make sweeping changes on Wall STreet, then of course write your article about R/S, but until this Short sellng is exposed, it makes no sense what you wrote about today, none at all. How could you spoil Sandra’s national debut with an article like that. I can only hope you sleep on it tonight and respond to her in morning.
Dick
when i read the article, I though i was reading Rick Aristotle….LOL listen you have yor right to freedom of speech, just think you chose a very very bad tme to write about that topic, it could be nothing but the furthest from he truth. I speak in truth, I was at that meeting.
can someone please answer the following questions:
1) is CRFCEO the same person as Brandon Matthews?
2) if so, when did they come out and admit to this?
3) and, if so, what prompted them to admit this?
no one ever answers my question. I have asked it before, only to be told that boy are you behind the times. do you all have a secret agreement not to answer the question I asked.
@sxminvestor
And what sort of proof are you offering by making this charge? If you have it – post it. If not what kind of an ass are you for making this kind of unfounded statement?
@shark
Try Google. There are no secrets.
@Cartman 3:16
thanks, found the answer; don’t know where I was then; think I may have been in a trial.
“Who was shorting the stock? Who was accumulating the bonds? The record is clear.”
BRAAAANDON???? Were YOU the ONE shorting the stock and accumulating the bonds? LOL. Now THAT would be a conspiracy!
Lol. I’m just bustin’ yo chops Brandon. I just happen to find your boner for a R/S knows no bounds. Especially now on the verge of the iphone release. Why dontcha write about the Toyota news? Now THAT is a REAL STORY.
I stand by my opinion that the Russell 3000 will NOT result in a R/S. I’ll even bet you REAL money.
a reverse split kills us longs.
If that happens, there’s no reason for me not to cash out because it would take a share price of over $200.00 to break even.
If they do a reverse split, I’m all out.
right where’s The President with the uptick!@Paul